CANBERRA OBSERVED: Unanswered questions about oil-for-food scam

Washington warned the Howard Government as far back as January 2000 on United Nations concerns about what AWB was up to.

The Cole Inquiry into kickbacks made to the Saddam Hussein régime by AWB (formerly the Australian Wheat Board) poses some extremely serious problems for the Howard Government.

Australia went to war against Iraq on the basis of intelligence reports that the country had amassed an arsenal of weapons of mass destruction (WMDs) which threatened western nations. No weapons were ever found.

The Government, with Foreign Minister Alexander Downer leading the charge, argued ex post facto that the real justification for the Iraq War had been to oust the despotic Saddam Hussein régime.

Now, based on the evidence being presented to the Cole Inquiry, it appears that officials in the Department of Foreign Affairs and Trade were, at a minimum, turning a blind eye to the kickbacks and possibly facilitating the AWB's shady dealings.

While most companies are obliged to engage in some level of under-the-counter dealings when doing business in the Middle East, the $300 million in kickbacks was in direct contravention of United Nations humanitarian programs designed to relieve the suffering of everyday Iraqis.

Instead, an investigation by former chairman of the Federal Reserve Bank, Paul Volker, found that Western companies were winning contracts by paying Saddam Hussein's Government instead with $2.2 billion in kickbacks.

According to US Congress reports, it is almost certain that some of that money was used to buy the bombs and guns now being used by Saddam Hussein loyalists to try to kill American (and Australian) troops today.

Volker found that the AWB was the worst culprit among the 2,200 companies involved - paying out almost 15 per cent of all the dirty money to Saddam's régime.

He also warned the Howard Government as far back as January 2000 on UN concerns about what the AWB was up to, but the Howard Government assured the UN there was no problem.

For months, senior AWB executives strenuously denied any wrongdoing in selling wheat to Iraq before the war or that payments for the United Nations oil-for-food program were being funnelled into accounts of Saddam's henchmen.

If there was any deception, it was the AWB which was the unwitting victim of the scam, the executives argued.

AWB chief executive Andrew Lindberg declared the company would be exonerated by the inquiry and recently put his hand out for a pay rise to add to his already generous $1.8-million-a-year salary.

The Howard Government also stood behind the AWB, with senior ministers last year actually blaming the United Nations for being responsible for any possible deception because it did not properly supervise and police its oil-for-food program.

Prime Minister John Howard assured the Australian public that AWB were "straight up and down people".

"I can't imagine for a moment that they would have knowingly been involved in anything improper," he said in October last year.

However, within three days of the start of the Cole Inquiry, the AWB and Lindberg's defence crumbled and their lies and deception were exposed.

Commissioner Terence Cole accused Lindberg of misleading his board and of making up evidence in his attempts to explain AWBs involvement in providing kickbacks to the Iraqi régime.

Evidence was produced in the form of an AWB memo to pay more than $2 million to former Iraqi Trade Minister Mohammed Medhi Saleh, who later became the "Six of Hearts" in the United States' list of Iraq's Most Wanted.

The former trade minister is now incarcerated in a US prison.

Likely to have known

Australian officials are likely to have known that these dealings were occurring and, if they did not, should have known.

Whether the ministers or their offices knew is an entirely different question.

Unfortunately, when the Howard Government set up the Cole Inquiry, it specifically excluded Government involvement from its terms of reference.

The terms of reference given to Commissioner Cole for his inquiry do not empower him to make findings, conclusions and recommendations concerning whether or not the Howard Government, its ministers, its advisers and officials did their job properly. That restriction was a mistake.

Now Labor's Foreign Affairs spokesman Kevin Rudd will not rest from pursuing the issue once Federal Parliament resumes on February 7.

"There was a systematic pattern of contact between the AWB and the Howard Government throughout this period of these contracts under the oil-for-food program," Rudd declared recently.

"It beggars belief that no-one warned the Howard government that there was a problem."